A spokesman for Britain’s biggest car dealership has criticised the introduction of the government scrappage scheme and has described how it could mean the end of the 0% interest car loan.

Trevor Finn, from Pendragon, said that dealers were already offering discounts to customers through a whole range of offers and deals and that some would need to be cut if sales companies are to comply with the new £1000 scrappage discount.

The scrappage scheme begins in the next month and will see customers offered a discount of £2000 if they traded in their old car at the same time as purchasing a new model. A government spokesman said that the scheme would reinvigorate the currently stagnant market.

"Discounts are masked and disguised – 0% finance is a form of discount. As a consumer you have to look at the bundle of offers available. Will you be able to get 0% and a £2,000 discount together? It's not completely thought through. Car makers are already discounting products. Where are they going to find an incremental £1,000?" said Finn.